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Old 08-22-2007, 03:16 PM
 
32,557 posts, read 51,122,069 times
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has anyone considered how this 10-15% drop in most people's portfolios will translate into real people making withdrawals from their retirement accounts?

I am worried not because we are living from 401K/IRA withdrawals but my husband would like to retire in next couple of years and his company does not do a pension--so it is Social Security and what ever we have saved that will see us through...we will have to see some pretty good market upside to replace what was lost in this slide...and there is no guarantee the market will good up substantially in the future...

If most guides recommend to withdraw max of 4% from retirment accounts so that you don't overdraw and wind up outliving your funds---what happens when you are making those withdrawals and the market does drop significantly--this is the biggest % drop in a decade ---right? and I don't see it getting back to 1400 within a year, if that--but I am not a guru...just think the downturn will be slow to be erased...

I know that once you start to take dispersements that you really can't stop or face some kind of penalty--but now the money they take out is %-wise worth more in total value of portfolio than it was say in March...
1000 is a high percentage of a 400,000 portfolio than in a 500,000 one---4% of 400,000 is 16,000 and 4% of 500,000 is 20--that 4000 can make a significant difference in people's lifestyles...
plus every dollar that is taken out of the account is one less dollar that works to gain increase from its investment value...

so does anyone know/guestimate how that aspect of the drop will affect people and the economy?
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Old 08-22-2007, 03:36 PM
 
Location: Sacramento
13,872 posts, read 24,803,010 times
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Quote:
Originally Posted by loves2read View Post
has anyone considered how this 10-15% drop in most people's portfolios will translate into real people making withdrawals from their retirement accounts?

I am worried not because we are living from 401K/IRA withdrawals but my husband would like to retire in next couple of years and his company does not do a pension--so it is Social Security and what ever we have saved that will see us through...we will have to see some pretty good market upside to replace what was lost in this slide...and there is no guarantee the market will good up substantially in the future...

If most guides recommend to withdraw max of 4% from retirment accounts so that you don't overdraw and wind up outliving your funds---what happens when you are making those withdrawals and the market does drop significantly--this is the biggest % drop in a decade ---right? and I don't see it getting back to 1400 within a year, if that--but I am not a guru...just think the downturn will be slow to be erased...

I know that once you start to take dispersements that you really can't stop or face some kind of penalty--but now the money they take out is %-wise worth more in total value of portfolio than it was say in March...
1000 is a high percentage of a 400,000 portfolio than in a 500,000 one---4% of 400,000 is 16,000 and 4% of 500,000 is 20--that 4000 can make a significant difference in people's lifestyles...
plus every dollar that is taken out of the account is one less dollar that works to gain increase from its investment value...

so does anyone know/guestimate how that aspect of the drop will affect people and the economy?
Well, I like that 4% rule myself, it really negates the problem of outliving your money. I'm OK with kicking it up to 6% when you hit your late 70's, at some point your problems kind of "go away", unfortunately.

What I would suggest is you have a set point in time, say December 31st, and whatever your aggregate investments are at that moment, you can take out 4% the following year. Another strategy, if that alarms you, is to have four set points, say the end of March, June, Sept and December, and take out 1% of what you have invested at those dates, allowing you to accommodate market swings.
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Old 08-22-2007, 04:14 PM
 
32,557 posts, read 51,122,069 times
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what i meant was what about people who will take money out and now have to change their withdrawals--is that amount set or is there flexibility with how much needs to be taken out...
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